Sometimes being on the cutting edge can be an uncomfortable place to sit. Oil giant
Royal Dutch Shell,
RDS.A -1.21%
which is leading the charge into cleaner-burning natural gas among Western majors, discovered that again last quarter.

Shell turned in a strong first-quarter 2018, thanks to higher oil prices and fat volume increases in natural gas. Gas production was up nearly 10% on the year—from just a 2% rise the previous quarter—and earnings jumped 67% to $5.9 billion, the highest for one quarter since 2013.

That’s all great news for shareholders. The fly in the ointment, like the quarter before, is Shell’s declining output of liquid fuels—crude oil and natural gas-drilling byproducts such as ethane—which means that it can’t fully reap the benefits of rebounding oil prices like European rival Total, which boosted its output by 14% on the year last quarter. While Shell is producing more oil from its continuing operations, its disposals of oil sands and other assets means total volumes were down 4% from a year earlier. On the quarter, volumes were up slightly to 1.8 million barrels per day.

On what the firm does produce, it is doing very well—its net margin hit 6.6% last quarter, the highest since 2015. And it looks reasonably priced compared with competitors, with an enterprise value 6.4 times expected earnings before interest, taxes, depreciation and amortization, according to FactSet—cheaper than Exxon and
Chevron
and marginally pricier than BP.